Outlook: Crude oil is extending its gains from yesterday as it trades up over a dollar alongside gas which is up nearly 3 cents. Diesel and natural gas action remains muted which may be a result of warmer weather revisions continuing to populate for the end of December. Crude may be finding fundamental support from a significant lingering supply disruption in the Black Sea region. Despite roughly 2 million bpd of oil exports being disrupted which started over the weekend, Russia’s seaborne oil exports as a whole rose by 370,000 bpd last week. Flows should resume to normal levels earlier this week which could quickly extinguish this temporary price pop. Saudi Aramco is expected to lower its oil price to Asia for the first time since June which typically isn’t a positive indication of demand growth. OPEC+ is still scheduled to meet tomorrow morning in which they may shed light on their demand view relative to their current production quotas. Recently, they have blamed oil speculators for driving the market lower rather than demand and traders will be curious to see if that remains the narrative.
Crude
- The storm over the weekend in the Black Sea region is still disrupting up to 2 million bpd of oil exports from Kazakhstan and Russia, according to state officials.
- Russia’s weekly seaborne crude exports rose by 370,000 bpd last week to 3.24 mbpd.
- Saudi Aramco is expected to lower its oil prices to Asia for the first time since June.
- OPEC+ will meet tomorrow with expectations that no production adjustments will be made.
- Weekly crude stocks in Europe rose by 5.7 million barrels or 12% last week.
- The API reported crude stocks fell by 800,000 barrels last week.
- Reuters estimates crude stocks fell by 900,000 barrels last week.
- The EIA will report inventories at 9:30 am CT.
- As of 7:30 am CST: Brent crude oil up $1.19 to $82.87, US dollar index up $0.074 to 102.820 while the nearby e-mini S&P 500 futures contract is up 24.25 to 4587.00.
Diesel
- Be conscious of basis levels when forward contracting for customers as interest peaks this time of year. Unfavorable basis can be avoided by buying futures and purchasing basis at a later time if levels feel abnormally high. Spot values have remained soft at -30c.
- Reuters estimates diesel stocks fell by 400,000 barrels last week.
- The API reported diesel stocks rose by 2.8 million barrels last week.
Gasoline
- Reuters estimates gasoline stocks rose by 1.4 million barrels last week.
- The API reported gasoline stocks fell by 900,000 barrels last week.
Propane
- Conway is trading at .6100 while Belvieu is trading at .6425.
- Conway Swap Oct24-Mar25 strip trading ~.7150.
- Spot Conway is trading at 34% of WTI.
Natural Gas
- Overnight weather runs removed 6 HDDs through the two-week forecast.
- Since last Wednesday, weather forecasts have removed 35 HDDs from two-week forecasts.
- Reuters estimates natural gas stocks fell between 9 and 31 Bcf last week.
- Low water levels in the Panama Canal continue to create logistical issues for exporting LNG out of the US.
Prompt WTI Spread: WTI remains in Contango but has lifted off its lows over the last week. The market still feels well supplied which should keep that pattern intact short-term.
